Whangārei moteliers are rejoicing after a proposal which would have seen their rates increase, some by as much as double, has been binned.

Whangārei District Council yesterday opted not to pass a proposal which would have seen moteliers moved from the multi-unit rates category to the commercial rates category.

As part of the Long Term Plan submission, the council proposed to not only shift the rating category of motels, but also charge them a targeted transport rate. Various moteliers made submissions against the proposal, stating the sudden hike was unaffordable.

Read more: Hundreds have their say on Whangarei District Council's Long Term Plan
'Horrendous' rates rise up to 81 per cent for hotels, motels

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As a result, the recommendation by council staff at yesterday's meeting was to ditch the targeted rate and to transition accommodation providers from the multi-use category they are currently in, to the commercial category over a four-year period.

However, Councillor Shelley Deeming went one step further, and moved an amendment that council stick with the status quo for moteliers.

"It felt unfair for the moteliers, they were hit with a shock with such a sudden rise," Deeming said.

She felt motels belonged in a separate category from other accommodation providers.

Deeming said hotels have bars or restaurants and therefore attract other users as well, where as motels have people who use the room and that's it.

"It's what I thought was fair."

Deeming's amendment got the approval of fellow councillors.

Avenue Heights motel owner Danny Leader, who took out a loan to buy the business about three months ago, was glad WDC opted against the proposal.

"We almost came to selling our motel with an extra $5000 in rates (proposed) each year but this is great news. I was hoping we wouldn't get hit with an increase,'' Leader said.

"I think it was a ridiculously unfair proposition to increase our rates so substantially.

"When we bought this motel, we were on a tight budget and for the council to chuck an extra $5000 a year would have affected our viability."

Owners of the Ruakaka Beachfront Motel, which has only 18 units, would have been among the hardest hit, with a more than 100 per cent increase proposed for the business.

The motel is paying $15,662 per annum but that would have risen to $31,333.

Lodge Bordeaux, the only five-star accommodation in Northland, was facing a rates rise of 81 per cent to about $20,000 from $11,000.

Motels would still get the standard rates increase felt across the district every year. Rates increase is calculated by adding inflation - the local government cost index - plus 2 per cent.

The decision is part of the council's Long Term Plan document which will go to auditors before it is adopted in full in the council's June 28 meeting.